delivered dueling speeches angry voters quickly reacted, crashing phone lines and web sites. welcome to "america live," i'm martha maccallum in for megyn kelly. as we inch closer to the august the 1nd deadline when the u.s. is suppos supposed to run out

of money to pay its bills we are seeing absolutely no progress in washington this afternoon, folks. it's the same headline a different day and the new warning that the risk of america losing its aaa credit rating, which it has had for many, many years is now in fact inevitable, according to some. stewart varney joins me now, he is one of those from fox business network. stewart are you saying that we will lose our credit rating at the level it's at regardless of what happens? >> reporter: no, i am saying that the president's speech last night made a downgrade much more likely. last night was an address to the nation. these addresses to the nation are essentially taking place at historical moments, and they are meant usually to unite us. last night's speech by the president, that was a very decisive speech, it was highly part son, it looked like a re-election campaign speech. he talked about taxing millionaires, billionaires,

corporate jet owners. that has nothing to do with the debt. he didn't bring us together to create a deal he forced us apart. if you're a rating agency and you're in charge of whether or not we keep that aaa rating or not you're looking at that presentation and saying, are we really going to get a handle on america's financial future? and with that speech last night the answer is, no, we don't look like we're going to get a handle on it therefore a downgrade looks much more likely. reuters just released a poll of 53 economists. 30 of them said we are going to lose, very likely our tip he will a reputation. martha: wow, what would that mean for americans across the country, stewart. >> reporter: it probably means higher interest rates and a slower economy. if you downgrade us we lose our financial reputation. america becomes more of a risk if you're lending us money. that means you're going to demand a higher interest rate if you lend america money, interest rates probably go up, slowing

the economy, making the jobs and housing problems even worse. that is in the long term. the short term affect is we take a hit to who we are, and how we think of ourselves financially. it's a hit to our reputation. martha: so much for american exceptionlism in terms of our economic strength. good to have you here as always. my next guest is a democrat who has changed his stance in the debt debate. he now supports a short-term deal that gets us over this august the 2nd hump. pwhrad to bglad to be joined by texas congressman quair. thank you for joining us. i hope you could hear from stewart varney was saying. he was saying a downgrade of our aaa rating. what is your response to what he was saying.

>> i agree with him. in 1979 when the printing presses went down for a while we saw the basis point go up and it cost us money down the run. there was a technical default in 1979. let's look at happened in japan this january, they went from a double a rating to a double a minus and that sent ripple affects through the financial markets that got the yen to go down and at the same time interest rates went up, so that could be a possibility also for the united states. martha: just a couple of months ago if i understand you directly, you were against raising the debt ceiling. what changed your mind? >> well, what it was is that i do want to raise the debt ceiling, but i want to do some structural changes, something where we can go ahead and help bring down the deficit. for example, if we've got to do this in a bi-partisan way. for example if you look at what reid did, reid got the $1.2 trillion that boehner had agreed to before he walked away

on friday. it doesn't include any taxes, so i think it's something that there has been some sort of agreement on, at least a tentative agreement and we've got to find a solution to this. martha, let me say this. you know, what happened to the concept of a conference committee where you get differences between the house and the senate, put them together, workout the differences? i hope we can do that soon so we can avoid the default on august the 2nd. martha: that may be exactly where we're headed. do you think it's unusual when you heard the president last night, he's still talking about raising revenues on the wealthiest americans. that is not in harry reid's package. you know, as a democrat are you torn between those two sides on that? >> well, you know, i voted for tax cuts and i prefer to keep taxes down. we've had the lowest tax rate since the tru truman administration. the way reid has the proposal which i certainly favor it doesn't include any taxes, it does include $2.7 trillion of

cuts, and i want to go ahead and get an agreement, let's get it done before the august 2nd default. martha: you know, congressman we've been hearing that they've been flooding the phone lines on capitol hill today. what kind of calls -- are you getting high-volume calls in your office and what are folks saying? >> i think people want to work this out. they didn't vote for a dysfunctional congress. they want us to sit down just like any other. look at the nfl, they worked out their differences. if the nfl can do it, come on this is the u.s. congress where we ought to be sitting down and working out the differences in a bi-partisan way. martha: congressman cuellar good to have you with us today. we appreciate it. >> thank you so much. martha: we are getting new reaction this hour to the president's prime-time speech last night. one liberal columnist suggested earlier that it sounded last night like the president was anticipating defeat an was trying to set up republicans to take the fall. we'll talk about that columnist,

what he said, in that writing about then minutes from now. in the meantime answer are your decide question at foxnews.com. we are asking what federal fiscal issue most concerns you? is it the debt, taxes? is it a downgrade by the ratings agencies for u.s. debtor is it the big question of default and whether or not it would indeed have to happen? weigh in, you can see what other folks are saying there, we'll check back in on that survey in a little while. let's go for a moment to the state of alabama where educators are raising concerns about the state's new immigration law. the people who run the school district are complaining that following that law may put them at risk of losing federal funding. jonathan serrie has that story live from atlanta. >> reporter: sponsors of the new law say it's going to give alabama taxpayers an accurate assessment of just how much they pay each year to support public

services, including education for illegal immigrants. but some public school officials say it places them in an uncomfortable position. some alabama educators fear the state's new law cracking down on illegal immigration could jeopardize millions of dollars of federal funding for public schools. at issue is one provision requiring schools to report the number of undocumented students they enroll. phoenix city school superintendent larry dechera says it's eupl practice if not unconstitutional. >> if a kid comes in here and speaks broken english should we then begin some kind of document search on them? should we ask for their green card? should we fingerprint them? you know we are certainly not going to do those things. >> reporter: critics say schools should be in the business of education not law enforcement. lawmakers behind the new legislation says it's all about statistics. >> we are not requiring them to turn any specific person in in

any way, which is what is being put out. it's about statistics and knowing how many people are here. >> reporter: martha, civil rights groups have already won temporary injunctions against portions of similar immigration laws in four states including here in georgia, but lawmakers in alabama say the relatively late arrival of their law, which takes effect in september has allowed them time to study what is going on in these other states, and to draft legislation that they believe will withstand challenge in their state. martha. martha: interesting story. we'll see, jonathan, thank you very much. a u.s. soldier in afghanistan fighting to defend our freedom finds out that his parents are being sued over their tribute to his military service. we are going to find out why this sign on their front lawn has sparked a major, legal battle. and a new warning about the u.s. economy, and it again involves

the beleaguered housing market. we're going to find out what is causing this latest disappointing trend. more on that for you. the chilling new details that we are now getting from the teenagers who survived a bear attack in the alaskan wilderness. we'll talk with the folks who ran this wilderness adventure just ahead. >> it wasn't fun, i know that much. it wasn't that fun. i kicked him dead up in his face, like right in the middle, kicked him. he was done after that, ko, you don't mess with me. [laughter] >> i was scared, i was scared, but still where i'm from we don't play that. [ male announcer ] get ready for the left lane. the volkswagen autobahn for all event is back. right now, get a great deal on new volkswagen models, including the jetta, awarded a top safety pick by the iihs. that's the power of german engineering. hurry in and lease the jetta s

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martha: there is a desperate search on right now for a missing american who is in the waters off of the coast of indonesia. he is 32-year-old danny babise who was last seen surfing off of a remote reef in sue math traffic. he was on the last leg of a

dream surfing vacation with his wife rachel. she says a small crew of drivers and a helicopter are scouring the water and nearby beaches. two lawmakers, chuck schumer and congressman pete king are assisting the family with travel arrangements and urging the u.s. government to help in this search. over the weekend, friends, family and students, a high school mountain teacher and surfing coach gathered near the beach to hold a vigil in his home down. and a dramatic legal battle is unfolding right now over how a military family is supporting their son during his military service in afghanistan. the family of lance corporal corey burr put this sign in their front yard last january, and before long the homeowners association complained. and now they are filing a lawsuit against this family. the burrs say they are being singled out and now they are fighting back. jodi burr is lance corporal burr's mother. welcome, good to have you here

today. >> hi. martha: your son saw the sign, you put it up right before he shipped out, correct? >> no ma'am, he's seen it through pictures. we put it up after he deployed. martha: you put it up on your front lawn to show everybody how proud you are of your son. it says our son defends our freedom and has his name and picture that everyone can see right now on the screen. and then what happened? >> we placed the sign in our yard when he deployed, and soon after that we received a letter from our homeowners association demanding its removal. martha: why, on what basis? >> on the basis that it is a violation of our covenants, they state that there are no signs on any lots in view of the public. martha: and you claim that there are lots of signs of other kinds of signs. what are they around your neighborhood, what kind of signs are they. >> yes, ma'am as i speak to you today there are signs still on display in our neighborhood. there's signs that advertise schools, local schools, sports

teams, there's religious signs. there's signs for members professions such as firefighters, people advertising for motorcycle riding, just particular interests of the neighbors that live around me. we also have two other signs on our lot that have not come into question by the homeowners association. martha: apparently you can cheer on your team, the motorcycle group in tourpbgs you can cheer on your church, but when you cheer on your son who is fighting for this country in afghanistan somebody has a problem with that. i'm wondering who is it? specifically at the homeowners association, who -- do you know who raised this issue specifically and have you spoken with them about it? >> no, ma'am we have not. we've spoken with the president of our homeowners association and we've spoken with a member of the board, who is on the on site committee. but we have not found out if there is a particular complainant. we've received nothing but support from our neighbors. they've come to us, written letters on our behalf. everyone we've spoken with has

spoken in favor, and shown great appreciation for our efforts in displaying the sign and are now standing firm in our fight against them to keep our right to continue to display our sign. martha: what was your reaction when you got this letter? , you know, i mean could you believe your eyes? >> well, quite honestly we were surprised, because we do know that our neighborhood has covenants, we are aware of them, but the sign covenant has not been enforced in the entire five years we've lived there. in the same place where the sign is today we had for four years a sign that showed our pride in our son's high school, you know, home of the parkway panther, the school that he went to, that sign stood for four years and was never in question. when we placed the sign in our or yard we didn't think twice about it being a problem, and so when we received the letter, obviously, yes, we were quite shocked and taken back and made efforts to communicate with them in return. martha: what was your reaction

within your family? did you discuss the idea of taking it down or were you immediately against that? and what kind of reaction have you heard from your son? >> we had to weigh and decide the benefits and the drawbacks of keeping it in its place. after looking throughout our neighborhood and seeing the number of infractions that were going unnoticed, routinely, for years, we decided that we wanted to go ahead and make this a battle that we were going to continue to stand up for. our son is aware of the fight that we are in, however, our communication with him is very minimal. when we get to talk with him rereally talk with him about his well-being. we've made him aware. he is certainly behind us, and is telling us to trudge on and he appreciates that we are doing this on his behalf and the other marines fighting with him. he hasn't expressed a whole lot of emotion because we really focus our conversation on well-being. martha: no doubt he has a lot

more important things on his mind. we thank you for your son's service and we thank him. and we know that you are in the middle of this lawsuit. we did ask the homeowners association, because we are trying to figure out what their problem might be with this sign. we didn't get anywhere with them either, which probably won't surprise you. it says that the office will not be commenting publicly because they are in the middle of launching a lawsuit against you. >> right. they have launched a lawsuit. we have been served. martha: we thank you for being with us today. we hope you'll keep us posted on this and come back again with the newest developments. martha: thank you. martha: we appreciate that, ma'am, thank you very much. >> we appreciate you too, thank you. martha: how about that. all right. well a tennessee pastor is raising some eyebrows at a nascar race. he borrowed part of a prayer i guess could you call it from the movie talladega nights. we'll show you why some people are raising hell over his special message to the lord. you've got to hear this one folks, it's quite something. thousands of post offices set to

close their doors forever. new information this hour on who will take a hit and what it means if your local branch is on the chopping block. ♪ mr. post man look at me. >> oh yeah. do you have a letter in your bag for me? i've been waiting a long, longtime, since i who heard from that gal of mine. ♪ ♪

martha: we are hearing new warnings from the post office that a giant budget gap may soon force it to close 10% of all of the post offices out there. it currently operates more than 31,000 retail outlets across the country. 3600 of them could get the axe. many of these offices are located in rural areas where only a few hundred people are

served by them, and last year the post office lost $8 billion. so perhaps it's time to rethink things a limit bit there. we'll see how that works out. all right. so there are new concerns that the debt debate is just a reflection of a much bigger problem in this country. the government is promising more than it could ever make good on for the long term. so now analysts say that fixing that problem in the long term is critical to the u.s. remaining solvent. there is a novel idea. chief washington correspondent jim angle is here. >> reporter: this is the latest skirmish in a long war against steadily increasing government spending. total government spending at all levels was 27% in 1960. it has reus inch even to 37%

today and is headed to 50% by 2038. why? because we've promised far more in entitlements such as medicare and other benefits than the government can possibly pay for. the gap is bigger in part because of a percentage of americans who pay zero income taxes has skyrocketed at the same time government benefits have. >> 51% of working americans have no federal income tax liability. today almost 70% of americans take more out of the tax system than they actually pay in. americans are shocked when they learn that and they don't like it at all. about two-thirds of americans say that everybody should pay something, and all economists will tell you that one of the keys to tax reform is broadening the base. >> reporter: because those who pay no tax to support government benefits have no stake in reducing them, even though they are unsustainable. some lawmakers argue the budget cannot be balanced, as they put it, on the backs of seniors and the poor. listen. >> when we look to save money by cutting medicare and social

security senior citizens have worked all of their lives putting a good portion of their paycheck into a system that paid for the well-being of their parents and grandparents. >> reporter: but brooks and others note that programs like medicare are simply unsustainable having promised tens of trillions more than the government can possibly pay for. and social security faces 23% across the board cuts in 2036 when it can no longer pay full benefits. that's why brooks and others argue the most humane thing is to fix the programs so seniors aren't left in the lurch down the road the way people in greece are today which also built an unsustainable system of government benefits it could not pay for. martha: there may be a lesson in the future on that situation. thank you very much. there is a new warning today on the u.s. economy, and it again involves back to the housing market, folks. we are going to find out what is causing the latest very

disappointing trend that you need to know about with regard to your home. and seven teenagers rushed by a grizzly while hiking lieu the alaskan wilderness. we will talk to one of the people who helps run that program in ten minutes from now. >> i would say that it was just general chaos. i believe we startled the bear, and so when grizzly bears are startled they attack. [ male announcer ] this is lisa, who tries to stay ahd of her class.

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martha: we are getting a pretty big read on how the housing market is doing and it is not looking good. the the commerce department reported new home sales dropped another percentage point last month and that hits record lows in parts of the northeast and in the west. cheryl joins us for a look at this. >> reporter: the numbers were not good from the commerce department. let me go through a do yo couple of key points. the expectation from the analyst community is it was going to again 1.2% from a sales high. that with us not good news. the annual rate, this is within the report, we look at this because it khels us what is the annual sales rate, they average it out throughout the year. for the month 323,000. just to give you an idea, 750,000 is a healthy market. we are at 323,000. the northeast and west were hit

the hardest. positives for the folks in the midwest, they need it after all the storms they've had. prices, something else interesting i want to point out as we look at all the home build tere companies. you have toll brothers, kb homes, all the stocks are down but prices actually increased more than 7% year over year for new home sales. why? that doesn't make any sense, right? it does, because the companies have been scaling back for the last four years. you really haven't had a strong healthy housing market since 2006 to be honest with all of you. they have scaled bacon trucks so incredibly in large amounts now, now that that inventory has been bought down. so we're looking at a fewer amount of new homes that are actually available especially the first time home buyers that love to get those deals, they did it last year with the inventory down the prices are going up, that could really, martha, i'm hoping is going to be a positive sign for the market. and maybe a little bit of a turn around, at least for new home

sales. so we'll see, we'll see. martha: we are looking for the bottom in that market for a very longtime. cheryl thank you very much. cheryl cassone. we want to bring you this. there is a lot popping right now in the press briefing room on the debt crisis issue. for the last 20 minutes the white house press secretary has had to answer an angry barrage of questions from reporters as to why the president isn't offering more specifics on what he wants to see in this debt deal. here is fox white house correspondented henry and press secretary jay carney in this exchange moments ago. >> if you basically have this boehner plan that you say can't get through the senate and you have a replan that the republicans don't think can get through the senate and the house and you're saying you want to compromise. what was the point of giving a prime-time address to the nation without a obama plan. >> i understand the idea that there is not an obama plan. >> there is not, there is not

one on paper. >> it's point number one on the talking point issues by the republican party, i get it. >> it's not a talking point. show us the plan. it's not a talking point, that is unfair. >> first of all the president put forward in tee tail his principles at george washington university. he went into a lot of detail. the president stood before you. i can't remember if you were here friday night, some of you were, but a lot of you cut out early [oh ] >> he put in detail with numbers what he's willing to do. he then referred from the podium to the fact that white house officials would be briefing in detail. martha: wow, all right that was interesting. joined now by leslie marshal syndicated radio talk show host and fox news contributor and lar larsen syndicated radio host. i'm going through our urgent file, leslie and there is a lot more than what we just showed you in terms of jay carney, and the back and forth with reporters there. what is your reaction to that exchange? there's been a lot of talk today about the president's speech

last notice and basically why he did it because he wasn't moving the ball anywhere, so to speak. >> well i think one of the reasons the president did it is he's promised to be -- and he's been asked by the american people to be and promised to be a president of transparency. i think he was keeping the american people in the loop and saying this is not happening behind closed doors. lars be good, there is a grizzly on the loose i hear. [laughter] >> you know, bottom line is he's telling the american people, look, this is where we are, this is what is going on, this is where the impasse is, and there is still no compromise where they are going to step over the line and get this deal done by next week. martha: here is what is very odd about that. harry reid said he would go with a 2-point something trillion cut that absolutely had no revenue increases in it. here is the leader of the president's party in congress, he says we're going to do a deal with no revenue cuts and the president gets up last night and it's almost like he didn't hear that. he steps up and talks about the fact that they need to have

balance, balance, balance, he spoke about it many times in terms of getting some revenue increases from the wealthy. leslie, just respond to that first, then we're going to go to lars. >> well, no question that senator reid and the president disagree on that. i have to say i'm with the president on this. i know life isn't fair and the president loves to use that word fair. it isn't fair to ask the middle and lower income to continue to give a temporary tax credit, the authors made this a temporary deal for ten years, it's gone beyond the decade. it did not statement late the economy. they did not hire people with the money and it's time to let that expire as the authors originally desired. >> oh, my goodness. listen this is what is crazy. the president has never advanced a plan, that is number one. number two, transparent? he's so transparent he's practically opaque. he's done so much behind closed doors. finally, as far as fair if the top 10% pays 65% of the bill that is not fair enough? you know, if you went back and did a hundred percent tax on the

top 2% of americans it still wouldn't fill the hole that president obama has created with this $1.4 trillion deficit. it just doesn't pencil out, leslie. martha: i'm going through some of these other comments from jay carney moments ago and basically he has said that the president will go for a deal that does not have any increase in taxes. he says we understand that we won't get the exact bill that we want. so this is a huge concession, is it not? and are we not seeing the tremendous influence of the tea party in this decision, leslie, because the president is now indicating through his press secretary that he'll go for a deal that actually does not have the kind of balance that he spoke about so many times last night. >> well i actually don't think that is the smart way to go. i mean, one, he's hurting himself not only for a bid in re-election, because it's dividing the democrats, i have fellow democrats that are arguing with me on this issue now. in addition, you have plans like

social security that have a surplus, don't contribute to the deficit, fully solvent for the next ten years, that's on the table, huge cuts to medicare that people don't want. >> what? hold on, leslie that is a lie. >> in addition the bottom line is, americans want this debt ceiling raised, they do want the budget balanced. you can't do all of this by next week, and they want jobs. where is the jobs bill from the republicans? that is a specific i would like to see. >> leslie, first of all social security, social security this year took $59 billion out of the budget because they are now run at a deficit. it's small compared to where it's going to be but it is not revenue positive. secondly, when you say it's not smart, is it smart to take this economy that stinks already and shows no signs of the summer of recovery we were supposed to have seen a year ago and say let's load more taxes on top of it because we have to make sure the government class can this its limousines that obama has expanded, raises for white house

staff and every other federal program on the planet. get rid of the department of education that would save one trillion over ten years and they don't do diddily for education in america. martha: we are continuing to get these reports that the phones are ringing off the hooks, particularly in senate offices this afternoon. >> yep. martha: and the mix, we are trying to figure out exactly what the folks are saying that are calling in. there is definitely support for the president in terms of what he said last night. there are also people who want to get some kind of deal done that we're hearing from as well, or that they are hearing from in the senate. also a lot of support for cut, cap and balance. it's a mixed bag as you would expect but -- go ahead, lars respond to that. >> consider that, though, rasmussen poll is a pretty much down the middle poll, not left or right. it says 60-plus percent of americans support cut, cap and balance. if you look at the people who think the congress will cut too much or too little, the ones who think congress is cutting two little number above 60%. the ones that fear that congress

will cut too much is only 25%, that is the president's position. you know the president's position all along has been, don't cut raise taxes, increase the deficit. martha: that's what i want to close on here and i want a thought from both of you. when you look back, leslie the president wanted a clean hike in the debt ceiling. he didn't want to do it with any spending cuts. he now looks like he's going to, you know, come full circle and end up with a hike in the debt ceiling that is all built on spending cuts with absolutely no revenue. and i don't think you can under state that. this -- what does it say to you? i know you say you don't agree with his capitulation on that, but what does it say to you about his leadership and how the president doing? >> well i say that the president is a bigger man than i, obviously i'm a woman, but i mean in the sense of compromise, because the best negotiation is with both parties leave the room winning and losing in a sense because you leave things on the table. martha: apparently -- leslie

apparently they are compromising and leaving him completely out of it. >> yep. >> i don't feel that the president is being left completely out of it. i agree this should have been a clean raising of the debt ceiling, move on to the budget later. i think that would have been best for america and both sides. >> what? >> to come up with a plan that they didn't just put a band-aid on. this will be a temporary fix which i don't think is in the best interest of the economy or the american people. >> more borrowing and more debt is not what america needs. the president is being dragged to that position kicking and screaming, god bless the tea party for doing it. this is a man who has not advanced a plan. he has not suggested anything. he managed to just act angry and pop up on tv every two hours. martha: thanks to both of you. big developments this afternoon. keep watching this. we are getting somewhere in some resolution on all of this. leslie and lars thank you so much. always good to see you both. we'll bring you this story coming up. he meant to raise spirits, but one pastor raised a whole lot of

controversy. we're going to tell you why some folks are very upset with what he said about his wife during a prayer at a nascar event. you've got to hear this to believe it, folks. and the grizzly bear attack that has everybody watching this situation where a group of teenagers who were putting their survival skills to the test, we'll find out what they learned at the outdoor leadership school that saved their lives, when we come back. >> i thought i was going to die when i was being attacked. i was so scared. >> we saw the first person go around the corner and yell, bear and he started running backwards, and i looked behind me, and the bear was behind me, so i started running down the hill and it tackled me on the way down. [ male announcer ] this...is the network --

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it's the cleanest, clearest water. we find the best, sweetest crab for red lobster we can find. yeah! [ male announcer ] hurry in to crabfest at red lobster. the only time you can savor three sweet alaskan crab entrees all under $20, like our hearty crab and roasted garlic seafood bake or sn crab and crab butter shrimp. [ jon i wouldn'tut it my table at home, i wouldn't bring it in. my name's jon forsythe, and i sea fd differently. martha: this is unbelievable. they stared certain death in the face. today a group of teenagers are coming forward with the chilling

details about their horrific run in with a massive bear during a wilderness hike in anchorage, alaska. take a listen to what happened when the grizzly attacked. >> we came upon the bear as we -- as we walked around, like a rock out cropping, and the bear began to attack. i believe we startled the bear, and so when grizzly bears are startled they -- they attack. and we also believe that the bear was a mother, and it had -- there was a cub present as well so the bear was acting in defense of its cub. martha: wow, what a story we are joined now by bruce palmer the spokesperson for the national leadership school. he runs the wilderness adventure program. good to talk to you today, bruce, welcome. this must have shaken you all up when you got word of this. >> absolutely. it's the worst possible thing that you could imagine.

we here at the leadership school, we are pleased to see how quickly the alaska state troopers were able to step in and get a helicopter in the air and moving toward the students to support them, and then get them out of the field. and so, yeah, you get that kind of word it gets your attention really quickly. martha: i can imagine. you guys have been leading outstanding programs for many, many years for students across this country. this must have been, you know, a real kick in the gut when you got that phone call. speaking of kicks, one of the boys that we heard from a little while ago he said, you know, i just kicked him in the face, this bear, and, you know, basically kod him, that's what we do where i come from. is that what you trained him to do? >> not exactly. in terms of our bear protocols, what we encourage anybody who is traveling in bear count throw to do is travel in a large group. in this particular instance there were seven students in the group. we would say that you should be

making noise, yelling hey, bear from time to time, letting the bears know that you might be in the vicinity, to move them away, scare them off so you don't startle them. martha: did you say you're supposed to yell, hey, bear. >> yes, hey bear or some -- martha: may, bear, here we come. >> that will work. any noise to move the bears away, you don't want to startle them. that's what happened in this particular instance. we don't know exactly why that was the situation. they were crossing a stream, could be the sound of the water kind of muffled the noise 0 or whatever. theynded up obviously way too close to this bear and it attacked. martha: one bay said he thought he was going to die. he was literally being trashed around boy this bear. and he said i thought about college, and travel and life and all the things that i was going to miss. he did not believe he was going to make it out of this situation alive. >> yes. martha: it's scary, scary stuff. >> very scary stuff.

and i think the real interesting piece of this story in many ways is the response of the students after the incident occurred, after the attack had occurred, you know, they did many of the right things, all the right things in fact. they set off their personal location beacon to get help. it began raining that evening, so they set up a tent. they took care of their comrades who had been hurt. they took care of their wounds, they were checking blood bless pressures, not blood pressures but taking pulse, things along those lines. in many ways we can say these students saved themselves through some previous training that they had and training they got here. martha: unfortunately they got the ultimate test of being out there on their own and they fared very well in the end. thank you very much for being with us bruce palmer. amazing story. it looks like they are going to be okay. >> we are happy, and our thoughts and prayers remain with

the two that remain in the hospital. martha: ours as well. thank you very much bruce palmer. good to have you with us today. this fox news alert for you the white house press secretary moments ago taking a very pointed question on whether failure to reach a debt deal could trigger an economic depression. we are going to get his response ready for you, you're going to want to hear that, minutes away. a lot of good stuff coming out of that news briefing. we'll bring that to you. and he promised a prayer that no one would forget, a pastor is now under fire for his smoking hot comments at a nascar event. we'll bring them to you after this. ♪ too hot lady, got to run for shelter, got to run for shade. it's too hot. too hot lady. go ♪ ♪

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debt crisis. this coming from a fired up briefing that happened moments ago at the white house. press secretary jay carney was challenged about one administration official who earlier suggested that failure to reach a debt deal could trigger a new depression. here is his answer. >> i think on cbs radio this morning dan fiffer said if congress does not act by august 2nd that could lead to a tkpreg. is that what you think, that we would have a depression. >> a depression, what i know, what economic experts have said is that -- and again, republican and democrat, jim baker, ronald reagan, all sorts have said that a default on our obligations would produce an economic calamity. how that -- how you define that

obviously depends on how long it lasts and what the ongoing implications of that would be. we don't believe it's come to pass. economic calamity is plenty scary and we should not even entertain that. martha: pretty scary indeed. we have breaking news now on this credit rating warning that we have been telling you about. we will bring you that right after this break. we'll be right back. i am beautiful... [ vet ] your turn max. [ cat ] inside and out. and i'm not the only one who thinks so...right doc? [ female announcer ] vets agree, a healthy check up starts inside. our breakthrough iams premium protection formula is developed with vets... ...with cutting edge ingredients for the lifelong health of your pet. [ cat ] what a surprise... straight as again! [ female announcer ] iams premium protection. our most advanced iams nutrition. ever. [ cat ] oh, i'm not in your way, am i doc? i...[yawns] am an iams cat.

martha: all right, we've got a fox news alert on america's debt stalemate which is literally getting worse by the second. we're about an hour away now from action on the latest republican plan, and we are now learning that it may not have enough support to pass. welcome to a brand new hour, everybody, of "america's newsroom" -- or "america live," i should say, i'm martha maccallum in for megyn kelly. in less than an hour, they start to week on speaker boehner's shorter-term debt deal.

this as the rhetoric continues at this hour to escalate. listen to this piece. >> i know the president would rather give speeches about our problems than resolve them, but he wasn't elected to talk about the united states, he was elected to lead it. the majority leader proposed a plan yesterday that's nothing more than another attempt to pull the wool over the eyes of the american people. >> as far as i can tell, the only dealing going on in washington is between the republican party and multiple personalities, and there are quite a few. martha: that's the kind of stuff that has the phones completely clogged by outraged americans today as both parties continue digging over a potential catastrophic default. a fox business exclusive now reveals that the administration has been privately telling top executives at major banks that a default won't actually happen. fox business network's charles gasparino joins us now with this

very big story. charlie, welcome. good to have you here this afternoon. >> thanks for having me. martha: you're saying the white house has been giving assurances to the people at the very top of america's banks? >> reporter: here's the deal, martha, when you're the president of the united states and you go on national tv and you say there is more than a chance of default if we don't raise the debt ceiling, i believe that's exactly what president obama said friday night. after that secretary, treasury secretary geithner went on the sunday talk shows, i heard him say specifically right before i went on that default is in the cards if we don't raise the debt ceiling. that gets people at the major banks which hold treasury bonds, remember, this is the safest security, allegedly, in the world. what they are doing is calling their sources inside the administration and saying is this true? because as we know, listen, it's not going to be pretty, but there's money on hand. other stuff could be cut, and you could prioritize to prevent a real fiscal calamity that can

occur if we default, and what the administration people are telling people at the banks is they are not going to allow us to go into default despite the rhetoric. and, listen, president obama could have a change of heart at the last hour when he says, okay, i have a chance to pay off defense contractors, we don't have a budget, we didn't raise the ceiling, debt ceiling, but i can pay off defense contractors and bondholders, and i'm going to pick defense contractors, or i'm going to keep the smithsonian open and, basically, stiff the bondholders. martha: of course. >> reporter: he could do that, but what the word coming out of the white house privately is he knows that's insane. that will touch off, martha, i don't think people understand it. a default touches off a massive crisis. by the way, if we default t-bond rating doesn't go to aaa, it goes to d. martha: why does it go to d, and then i'm going to go back to my other question. >> reporter: it goes to

default, the lowest rating in the world. they're all prices off aaa. it's bad enough if it goes to aa, imagine if it goes to d. this stops everything. martha: yeah, but charlie, here's what i'm hearing, and that is that timothy divider in is basically -- geithner is basically talking out of both sides of his mouth. chris wallace on sunday, basically, tried to drag out of him, so what would your plan be, as you were just saying, who would you start to pay off first and be what debts would you coffer first, he said, it's not going to happen because we're not going to get a default. then the word we're getting is tim geithner was the one saying to everybody, look, the asian markets are going to be completely roiled overnight if you guys don't get this done. so when is it? -- so which is it? >> reporter: and by the way, they weren't roiled overnight. listen, there's been some turmoil. here's the thing, i think the administration is being really duplicitous in this and, listen,

we know that you don't have to default. i'm not saying the sort of other scenario's pretty, but we know they don't have to default, why are they saying it? i believe they're saying it to get the markets insane -- martha: that's a pretty risky business. >> reporter: but that's the only thing you can surmise from this, why they keep bringing up default when you know they don't have to. martha: yeah. that's a very good question and a serious question. charlie, thank you very much. very interesting reporting as always, we appreciate your being here today. >> reporter: thank you. martha: charlie gasparino, folks, from the fox business network. last night the president suggested that a lot of americans don't know what a debt ceiling is or hadn't been really following this debate. here's a quick look at where the debate and the two leading plans stand right now. watch. >> the center of this whole debate is the debt ceiling, and just what is that? it's a set limit on what the government can borrow to pay its bills for things such as federal salaries, social security benefits and medicare.

and principal and interest payments to bondholders. the current limit is $14.3 trillion. one of the big sticking points in this deal for speaker of the house john boehner is not having a firm plan to cap what he sees as excessive goth spending -- government spending. >> the president's looking for a blank check. we have a bill that is a reasonable approach negotiated by the senate leadership that really is common sense. it cuts, there's more cuts in spending than you have an increase in the debt limit. >> reporter: boehner's plan also calls for $3 trillion in spending cuts over the next ten years. raising the debt limit by more than $2.5 trillion and no tax hikes. the plan offered by senate majority leader harry reid is also heavily dependent upon cutting spending with a sizable chunk from defense. >> we are spending this year for the military about $700 billion.

that's more money for the military than all the rest of the countries put together. so you would think in this debate that we have that the pentagon could chip in a few bucks, cut some spending. >> reporter: the plan offered by reid includes over $2.5 trillion in cuts over the next decade, raising the debt limit by 2.4 trillion. also no tax hikes. martha: all right. here with me now, republican senator mike lee from utah. good to talk to you again. >> thank you. good to be with you, martha. martha: the wanier proposal -- the boehner proposal, can it pass both houses of congress, do you think? >> in speaking with some of my republican friends from the house of representatives this morning, they were saying as of late last night they did not think there were enough republican votes in the house of representatives to get to 218, the magic number you need to pass something in the house. that could, of course, change,

but that's what i'm hearing as of this morning. martha: all right. so where do you go from there? you're going to try to continue on i cut, cap and balance. where does all that stand and, you know, that is a heavy lift as well as we know already in the senate. >> yes. it's a heavy lift, perhaps, but so far it's the only lift. it's the only legislative package that has cleared either house of congress. and to date it has yet to receive a substantive up or down vote or any meaningful debate, discussion or opportunity for amendment in the senate. we continue to push for that. we're also pushing for senator pat toomey's legislation to make sure in the unfortunate and unnecessary event that we pass august 2nd without a debt limit increase, we at least make certain people get paid including social security beneficiaries, bondholders at u.s. securities and also, um, our military personnel so that we don't want those people to be

used as pawns in this process as we move forward so as to scare the american people. martha: i guess the question for you, senator, is how dug in are you, and how dug in are your colleagues on the house side on this issue of, you know, cut, cap and balance? and are you willing to go along with john boehner's plan? fred thompson, the former presidential candidate, just said moments ago crossing the wires, he said, you know what? the tea party should claim this as a victory, and they should get this deal done and get the american people out of this peril. >> well, martha, this isn't about claiming victory or not. this is about putting america back on a path toward fiscal responsibility and economic prosperity. and we can't do that. as i explain in my book, "the freedom agenda," we will not get back on that path until we adopt permanent structural binding reform, and that can happen only through a constitutional amendment because this is a problem that will affect multiple generations of americans, and it's a problem that needs to be solved through

a solution that will bind multiple congresses. martha: let me ask you this, so if you stick with it, if you hang in there, right? how concerned are you about the ramifications on our debt rating, on the ramifications for americans across the country whose interest rates would go up as a result of this? >> i'm extraordinarily concerned, and that's why it's worth fighting for. but, martha, we have to remember that the risk of passing august 2nd without raising the debt limit is only one side of the equation. if you read the reports put out by these credit rating agencies, standard & poor's and moody's and others, they make pretty clear that just raising the debt limit cavalierly, reflexively without permanent structural reform mechanisms put in place could well be just as bad, arguably much worse than -- martha: you've got a point there. they have exactly said that. they want to see structural reforms as you're pointing out in order to convince them anything real has happened here. senator lee, thank you very much. good to see you as always.

>> thank you, martha. martha: we'll keep watching that, we're getting a lot of developments on that front. and we're getting reports from the house and senate that internet and phone lines are, basically, ringing off the hook right now, and here's what we know: angry voters are flooding the capitol hill switch boards at this hour with unusually high levels of phone calls. we're told that d.c. is using back-up numbers now in order to get the response from the american people, and web sites are also experiencing heavy traffic. we want to know how you feel about the debt crisis here on "america live." we're going to go to live blog during the entire show tomorrow, just log on foxnews.com and send us your feedback, and we'll respond to as many of you on the air as we possibly can, but the american voices are being heard today. they'll be heard here tomorrow throughout our show on "america live." we want to hear your voice, so speak out, folks. speak out. and there are some stunning new allegations about the fed's failed gun-running sting operation that's known as fast and furious. the bureau of alcohol, tobacco

and firearms accused of, essentially, arming a drug cartel for war. weapons flying off u.s. store shelves ending up in the hands of criminals hours later. it comes amid heated testimony today before the house committee investigating this program. atf agents in mexico saying they are disgusted and were kept completely in the dark on this whole operation. william la jeunesse has been on this story since the beginning, and he joins us with today's huge update in this story. hi, william. >> reporter: well, martha looking for answers and accountability today, congress got little of either in this fast and furious investigation. today we heard duplicity, lying, finger pointing and be a apologies for mistakes and poor judgment. now, this was the first time we heard atf management try to explain fast and furious. the agent in the charge, bill newel, evaded questions, entirely frustrating members of congress. >> what were you thinking? i think that's what we're all

scratching our heads about here today. >> this is the moe, curly and harry show, and we're looking for larry. are they lying or are you lying? >> sir, in this investigation it's my opinion that we did not let guns walk. >> you're entitled to your opinion, not to your facts. >> reporter: newel insisted he did not allow guns to cross the mexican border even though facts showed he did. he claimed his agents tracked guns when reports prove he didn't. and they chided him for purposely putting thousands of guns into the hands of the cartels. >> firearms trafficking cases are not complicated, sir, okay? the they're not complicated. the reason this case was so big was because we didn't do anything. >> reporter: this map shows 122 weapons have been found at crime scenes in mexico where police and soldiers have been shot, some fatally, with fast and furious guns. fast and furious, we know, helped straw buyers acquire

about 2,000 guns, 900 re-- 300 recovered in the u.s., 300 recovered in america, 1400 remain on the streets. last year newel briefed the north american director of intelligence at the national security council of fast and furious. the nsc is chaired by the president and operating out of his executive office. we also heard the u.s. attorney's office was briefed on this many months ago. martha: how far up does this go? and it looks like we're getting closer to an answer. william la jeunesse, thank you very much. so they helped to elect him in '08, so how did the president's strongest supporters now become some of his most vocal critics? mike gallagher joins us here with some ugly polls to look at in three minutes from now. plus, the man who fell down a 30-foot sewer fought off vicious snakes and lived to tell about it. we have his incredible story after this. >> i got a call from robert pal,

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martha: all right, we want to bring you this now. presidential candidate michele bachmann is at a campaign event today in iowa, popular place to be these days, and she spoke be moments ago about president obama's prime time address last night on the debt. here's what she had to say about it. >> i have a message for the president: raising the debt ceiling is not palatable to the american people, and tax increases certainly are not palatable to the american people. martha: all right. we asked the presidential candidate to join us today, she could not. we hope that we will talk with her directly about how tough she's hanging on that issue and the debt issue, all of that in coming days we hope to have michele bachmann for you coming

up. all right, and how about this? there's some new poll numbers out today that show that some of the president's strongest supporters may be heading for the exits. an abc/washington post poll is where this comes from, and it indicates major declines in his approval ratings both on job creation and on the economy. 60% say that they are just plain angry, and many of those polled are from the president's own base in these numbers. joining us now, fox news contributor and star of mike online.com, mike gallagher. [laughter] hi, mike, how you doing? >> reporter: i'm the fill-in for michele bachmann, are you kidding? boy, you've got to raise the bar. [laughter] martha: no, no, did we say that? you basically say you think his base is crumbling because they're disappointed in the man they elected to the job. >> well, they're disappointed, i think, over the issue of tax increases, martha. to a liberal, tax increases on successful job creators is dogma.

that's just what they feel. and he's lost that battle. harry reid is signaling no tax increases, the party, his party, president obama's party has abandoned him on this issue, and so i think real core democrats are furious at what they perceive as president obama's failure of leadership. martha: i think you are so right to point this out. you know, harry reid came out and put forward a plan that has zero tax increases, and then the president came out last night and said we want balance, balance, balance in this deal, and we want those who are at the wealthiest end of the spectrum to give more than they already do. and it's just, it's fascinating to me. it's like he's over here all by himself, and then you have got congress over here. he was supposed to get in the middle and work something out, and they're completely separate at this hour. >> and this is huge. i don't think people are acknowledging and recognizing how big this is. this is why john boehner walked out. he said, you're not going to surprise us with hundreds of billions of dollars of additional tax increases at the 11th hour, and i think president obama has to face the music, and

so it's bad for him from the left, it certainly has always been bad for him on the right. we've always, two years we've been saying there's no leadership, so it's bad for him. martha: here's the big question now, you know, we're a long way away from a presidential election. the president has a long time to get right with his base if that's what's going to happen here. but, you know, what are the signals about where he's headed in terms of that? and you've got bernie sanders, the socialist from vermont, he's a self-proclaimed socialist senator from vermont, he's saying, you know, it would do the president some good if we, if he had a challenger for the primary. >> well, that'd be a nightmare because i think he's already in campaign mode, so if he ramped that up, heaven forbid, you know, it'd be obama the politician, you know, squared. that would be a disaster. but, you know, i don't think it's as long away as you think it is. the american public is as engaged on this issue -- martha: i don't disagree with you there. >> i've never said anything lean this before, people calling me from the right, from the left, i

mean, they know now what a debt ceiling is -- martha: what did you think last night, because that sort of made me sit up. i was sitting at home watching the address on tv, and he said, now, many of you may be hearing for the very first time tonight this term, "debt ceiling." i thought, really? is that possible? >> condescending. no, of course not. you just reported the switchboards at the house -- martha: yeah, i guess nobody told them what a debt ceiling was. >> they were calling to order a pizza. [laughter] i'm proud of the role talk radio and mediums like fox news channel have played in informing the public, giving them both sides of an issue and letting them decide. it's what the tea party movement's all about. it's great. martha: mike gallagher in the role of michele bachmann today. [laughter] we upgraded, we got you. >> you hit the bottom of the barrel. martha: always good to see you. >> take care. martha: mike gallagher, folks. all right, well, you may have seen the picture of this.

democratic congressman wu, congressman wu, that was him in his tiger costume. today he is turning tail -- do you get it? he's announcing his resignation, this time over a sex scandal that is no laughing matter, and that story is straight ahead. plus, the state of california did what the federal government could not, and some critics suggest that it may encourage a new wave of illegal immigration in california. what jerry brown just did, huge story when we come back. ♪ hey, the new guy is loaded with protein!

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martha: new details just coming in on the resignation announced today of oregon congressman

david wu. the seven-term democrat denied alleges of an unwanted sexual encounter with a young woman saying whatever happened was purely consensual. just yesterday nancy pelosi called for an ethics information into this -- investigation into this matter. now wu, who was made infamous with this tiger suit picture that he sent out to staffers a year or so back, says he will step down, quote, to take care of the best interests of his family. wu says he will officially leave congress once congress resolves the debt ceiling debate. that could be a while, we'll see. all right, and we want to bring you this as well, a new law aimed at evening the playing field for ex-cons, san francisco is considering putting former convicts in a protective class to prevent discrimination by landlords and potential employers. california is bracing for a slew of inmate releases, but not everybody is behind this idea.

claudia cowan joins us with this story today. hi, claudia. >> reporter: hi, martha. well, the proposal would prohibit land regards and employers from asking about their criminal pasts in the an effort to help reduce recidivism, but critics say this whole concept is a crime in it. the city's human rights commission wants to add felons to protected categories when it comes to banning scrip in addition that employment and housing. that all sounds good to former offenders like monique love who says boxes on application forms asking about criminal history unfairly disqualify her. she says at one recent interview she never got the chance to tell her story of recovery and rehabilitation. >> didn't get a shot, not a shot. as soon as he saw that box was checked, he was, like, i'm sorry, we can't help you. >> reporter: others say there's nothing unfair about that at all, and at a recent public hearing property owners voiced their outrage.

>> my mother is an immigrant, my mother-in-law is a jew, and i'm a gay man, and those are all protected categories, but you're going to put a felon in there as a protected cat guy? that's not right. >> reporter: many landlords worry while employers worry they'll end up wasting a lot of time and resources interviewing somebody for a job only to find out later that the person's not a good fit precisely because of their criminal past. martha, public hearings continue to formalize this legislation with legal action sure to follow if san francisco gives special protections to people who broke the law. back to you. martha: that's an interesting one. claudia, thank you very much. claudia cowan out of california. and now we've got some warnings that are getting more urgent by the day, and now a brand new poll showing the risk of america losing its aaa credit rating is very real. the breaking news on our

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martha: all right. we've got some really interesting new poll numbers that have just come in the. this is a reuters poll, and it says that 83% of americans say that they are concerned about this debt crisis. 54% say they're very concerned about it. this comes just less than 24 hours after the president suggested that many americans were unaware of the debt ceiling issue. here's a clip from his speech last night. >> now, what makes today's stalemate so dangerous is that it has been tied to something known as the debt ceiling, a term that most people outside of washington have probably never heard of before. martha: never heard of before. so, also, in this reuters polling 29% of americans say that they believe republican lawmakers need to give the most ground in these debt talks. 25% say the president needs the give the most ground, and 20% say democratic lawmakers need to give the most ground, so that's where that stands.

all right. let's go to california for a moment where the governor, jerry brown, has just signed a bill that allows illegal immigrant students to receive privately-funded scholarships to attend california's public colleges and universities. governor brown calls the law an investment in california's future, but opponents say that financial assistance will only encourage more illegal immigration. sounds like that's along the lines of the dream act. trace gallagher joins us with reaction to all of that. >> reporter: in fact, the california dream act is modeled after the national dream act that failed to pass congress, but there's a couple of key differences. one, in the california you have to be in the high school for three years, you have to graduate, and then you can access those privately-funded scholarships. but there is also a bill in the california legislature that would allow illegals to also access taxpayer-funded scholarships. that, too, is expected to pass. and critics point out that the state schools themselves are

taxpayer-funded. listen. >> i think most of us are concerned about using our taxpayer subsidized college and university system for our own children and our grandchildren. not as an incentive to invite more people to come into the country illegally. >> it kind of feels like a goal, the more inclusive california, a more educated california. >> reporter: here's the key, this bill will not change their immigration status once they actually graduate college. they'll still be illegals. so as a state we're helping illegals graduate, but it's against the law for anyone to hire them. because they're still illegals. now, remember, illegal immigrants in california as well as 12 other states already, um, get in-state tuition rates which means that if you're an illegal in the california, you pay less than a student who wants to come from, say, arizona or nevada. but the dream act is now reality, and then other legislation that will accompany that is kind of in the pipeline here in california, martha.

martha: it's going to get a lot of reaction. trace, thank you so much. a lot of news breaking this afternoon, and now we've got this, brand new concerns that the u.s. could lose its topnotch aaa credit rating. a survey released about an hour ago finds that 30 out of 53 economists that they surveyed think america is definitely at risk of losing that credit rating from one of the big three rating agencies, standard & poor's, moody's and fitch. now, the economic fallout could effect every single american for years to come. here, now, peter morici, former chief economist for the united states international trade commission and steve moore, senior economic writer for "the wall street journal". gentlemen, welcome. peter, that's a big number of economists that think that's the way this is headed. >> well, i think that the president was accurate last night in referring to the system as dysfunctional. i went through both proposals today, the reid bill and the boehner bill, and they're so far

apart that it is difficult for me to see how they could be reconciled if they could manage to get them through their two houses by, say, saturday. so that on sunday they could negotiate out their differences, on monday pass the bill. i mean, i don't buy this business that it's going to take ten days to do something. they can suspend the rules and vote it up or down. martha: yeah, i agree with you on that. too often we hear, oh, there just isn't time to get that done, and when something has to get done, indeed, they get into the room, and they do it. steve, how serious the ramifications for this downgrade, and do you think we're going to get it regardless of whether or not we get a deal by the weekend? >> it's hard to tell. i do think in the coming weeks given what the credit agencies have said, i think it's likely we're going to see a downgrade. what eat hard to tell is -- what is hard to tell is what is going to be the impact on interest rates. if you look at what's happened, interest rates on u.s. treasury securities have actually fallen, so the real people are rating

america's treasury bills are the global investors, and they've actually been buying treasury bills, they haven't been selling them. >> yeah. >> but it is going to be a blemish on america's record if we for the first time, i think, peter, this would be the first time in american history, i may be wrong on that, that we would have lost our aaa bond rating and fallen to aa. >> as long as there's been aaa ratings, we've had one. if you look at the set of requirements laid out by s&p, it's just a question of when do we lose it. do we lose it next week? next year? because of the progression of events they expect to see happen, it is clear that this president is not willing to accept and that this congress is not willing to continence. >> well -- martha: it's interesting, steve, because when you look at this issue of what other investors think of us, you know, and then you've got goldman sachs weighing in as well saying if they don't see $4 trillion in cuts, nobody's talking in that

ballpark anymore, that they will say to investors around the world, basically, you know, we're downgrading our look at u.s. debt, and we don't think it's a good investment right now. >> look, we do have a debt crisis in this country, $4.5 trillion of debt in the last few years, and we're on a path to borrow another ten million over the next ten years. think about anytime there was any kind of disruption around the world whether it's an earthquake, a tsunami or whether there's a flare-up in the middle east. what is the first thing investors do when they want to rush to safety? u.s. treasury securities. martha: yep. >> even if we lose our aaa bond rating, the way i put it is if united states bonds are not aaa rated -- >> that's the whole point. japan had its rating lowered earlier this year, and nothing happened. investors have to validate the judgment of s&p, and they're not going to. what'll happen is the covenants in things like the mutual funds and so forth will have to be

changed because there's not an alternative to treasuries, and at the end of the day the united states can print dollars, they're going to meet their -- martha: let me ask you this -- go ahead, steve can i just say one thing? >> there is something, martha, that's safer than owning a treasury bill, you know what that is? owning gold. >> i disagree! gold has proven to be very volatile over the years, gold is not a safe investment. martha: it's had an incredible run -- >> i know. martha: but i want to ask you up with more question because when i watched president last night he said two wars that we couldn't pay for, a prescription drug plan that, you know, was way too expensive to pay for and the financial crisis that followed and that was toward the beginning of his watch and overlapping the bush administration. i couldn't help thinking, well, if we hadn't overextended ourselves to such an incredible

extent where we are sending out 80 million checks a month, the u.s. government, wouldn't we have been able to handle those things like the two wars in a much percent, stronger fiscal position, and isn't that what we want to do, where a war doesn't bust us -- >> my view on that, martha, is we have now this massive welfare state that, the origins started in the 1960s when we created the great society. and now we have the questions are we going to have a tax system that supports this welfare state, or are we going to get that welfare state down to size? that's the real issue. we shouldn't pass a new entitlement when we can't afford the ones we've already got. martha: peter, go ahead. >> in 2007, the year before the cry crisis, with the two wars waging, the bush tax cuts in place, the prescription drug in operation, at that point we got a democratic congress, they started extending medicaid

benefits, now the deficit is ten times as large. george bush did not create this with his policies. martha: that's clearly the message sent to the people by the american president last night. peter morici, steve moore, always good to get your insights. all right, breaking news on this debt deal, and this news is coming from senate majority leader harry reid and the white house. both slamming speaker boehner's plan. we're live on capitol hill in three minutes with what may be a dead on arrival deal, breaking news on that right after this. are you receiving a payout from a legal settlement or annuity over 10 or even 20 years? call imperial structured settlements. the experts at imperial can convert your long-term payout into a lump sum of cash today. constated?

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martha: well, a private funeral service today for singer amy winehouse, the five-time grammy award winner was found dead at her london home on saturday.

some friends at that service even wore her signature beehive hairdo, and fans lined the streets outside the cemetery to pay their respects and to remember what they loved the most about amy winehouse. >> a lot of energy, old school really, not like anyone today. just all about the money, and she was about the arts. >> there was life around her. she was up front, and her voice. her voice was o so beautiful, a beautiful artist. martha: her father said that she had kicked the drug habit but that she was still struggling with alcohol abuse at the time of her death, and he said she was happier than she had been in a long time, she was supposedly playing drums and singing so loud the night before that the neighbors complained, but there's a picture of amy winehouse in some of her better times, and she will be missed by the music world and those who are big fans. all right, let's go back to capitol hill where there is some

breaking news over the debt crisis. we're getting word that senator harry reid is saying that the speaker of the house john boehner's plan is not a compromise and that it is, quote, dead on arrival in the u.s. senate. here's senator harry reid just moments ago. watch this. >> speaker boehner's plan is not a compromise. it was written for the tea party, not the american people. democrats will not vote for it, democrats will not vote for it, democrats will not vote for it. it's dead on arrival in the senate. martha: great. looks like we're making some progress, right? doug mckelway joins me now live on capitol hill. doug, take it away. >> reporter: well, martha, i think that speaks for itself as well as anything does here. i just came from that little bit of a press conference outside the ohio clock there. it was preceded, interestingly enough, by the various policy luncheons, and our producer trish turner came away there

that saying there was some room for compromise. she spoke to a cross-section of senators from both parties who indicated in the large part that they are not that far apart. and then you get the senate majority leader, harry reid, coming to that press conference saying dead on arrival, dead on arrival. in addition to that, we have also heard from the white house that many of the president's aides have now encouraged the president to veto the boehner bill should it arrive at his desk. so, certainly, two entirely different perspectives here, we just don't know where it ends. philosophically speaking, martha, i can say there have been many, many times in the history of this congress where there seems to be a tremendous deadlock. but as the clock ticks down and things get closer and closer and closer, suddenly a deal is struck, and reporters spend the next two weeks analyzing how the deal was achieved. so never say never, but right now things look kind of dim. martha: yeah. we may have some final brinksmanship going on, let's

hope they're getting closer to something here. doug mckelway, thank you very much. appreciate it. >> reporter: sure thing. martha: here is this incredible story for you, a man falls down a 30-foot sewer and is forced to fight off vicious snakes. can you imagine anything worse? his incredible story coming up three minutes away, we'll be right back. >> definitely very scary. you could tell he wasn't all there, didn't really know, you know, kind of what was going on, had been down there almost two days.

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martha: walmart is getting into the streaming movie business offering films the very same day they come out on dvd. the nation's largest retailer recently brought the service voodoo.com, and now has 20,000 titles that can be played on

virtually any device with internet access. that's pretty neat. walmart's hoping to get a share of the market from netflix which is hugely popular just two weeks after netflix announced new price increases, so it may be a good opportunity to hop in for walmart. movies are value at wal-mart.com to rent for as little as a dollar and to start buying at less than $5. boy, the world has changed. all right, well, here is the story we were talking about earlier. a man in texas stuck 30 feet down in a sewer for two days, and he survives. you can see kevin as he was taken away on a stretcher there. the rescuers found him covered head to toe in snakebites. can you imagine anything worse than two days of that? trace gallagher has the dramatic details on this from our west coast newsroom. hello again, trace. >> reporter: hi, martha. turns out he got into a fight with his girlfriend on saturday afternoon, she called the cops,

and he fled into the woods. the next day he still didn't come back, so she reported him missing. on monday the search teams went out in those woods looking for him, and one of the searchers spotted a manhole coffer that was lifted -- cover that was lifted off. he looked down, and there was gotterman. he was naked and crouching over a river of sludge. listen. >> call from robert powell, and he told me that we found him, and i said, is he alive or dead? he goes, he's alive. he says, i need rescue people. he said he'd been bit by snakes, and he's trapped under the deal. >> reporter: trapped, all right, 6-4, 230 pounds in a 3-foot-wide suer pipe. -- sewer pipe. he had no ladder to climb out. not only has he been bitten all over by snakes and bugs, he was surrounded by sewage and badly dehydrated. listen. >> about 150 yards in saw an open manhole cover. kevin was crouched about 30 feet

down. >> definitely very scared. you could tell he wasn't kind of, you know, all there, didn't really know kind of what was going on and had been down there almost two days, so i figured anybody would probably be that way. >> reporter: now, he's still in the hospital, so there's no word on exactly how he got down in that hole, but the theory is that when he ran away, he was hiding from the cops and can decided to maybe hide inside that manhole then fell down there and couldn't get out. but, again, he was kind of rambling last time the cops talked to him, but he apparently is going to be fine despite the snakebites and dehydration. martha: that is a traumatic, awful, awful story. trace, thank you for that. all right, well, we've also got this tale for you, a little girl's amazing tale of survival. she's lucky to be alive after a shark tore into her leg. are you receiving a payout from a legal settlement

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california. live pictures coming from a man luntz that is taking place. you can see them on the ground in this helicopter shot. the police are looking for one gunman who opened fire on a police officer last night. the officer returned fire. it got so intense he had to be pull out by fellow officers in what is described as a military-style operation. police believe the gunman was guarding a marijuana farm in a heavily wooded area. they resume the search still after the guy who shot at the parks official. we'll see if anything develops. >> this is some story folks. this little girl will probably never forget what happened on this day. but she is very forgiving. a 6-year-old shark attack victim her name is lucy magnum the cutest little girl. she is speaking out after jaws

severed her artery and tore a tendon in her leg. she was playing on a boogie board 18 inches out from the beach, not far. last tuesday she saw a shark swim toward her. within seconds the shark grabbed her right leg and foot leaving two deep bite marks and exposing her tendons and muscle. now little lucy magnum says she forgives this wild beast. >> why do you forgive that nice shark? >> she said he didn't mean to do it. >> who did that shark think you were? >> fish. >> your foot kind of looks like a fish, right? >> wow, she a trooper. she really prefers dolphins, especially when it comes to swimming with them. she is expected to make a full recovery. she said he didn't really moon it, the shark. thanks for watching, good to have you with us. i'm martha